National Iranian Oil Company & Anor v Crescent Gas Corporation Limited

The majority held that section 53(1)(b) of the Law of Property Act 1925 requires written evidence of a declaration of trust over land to be signed personally by the settlor or relevant interest-holder. An agent’s signature is insufficient. A company must use the applicable statutory method of execution; an ordinary agency signature does not become the company’s own signature. For the purposes of section 423 of the Insolvency Act 1986, absent compliant written evidence, the transferor is treated as beneficial owner and a transfer to the putative beneficiary may be at an undervalue. Zacaroli LJ dissented on that consequence.

Crescent Gas Corporation Limited was a substantial creditor of National Iranian Oil Company. After an arbitral award remained unpaid, NIOC transferred NIOC House to the Retirement, Savings and Welfare Fund of Oil Industry Workers. CGC challenged the transfer under section 423 of the Insolvency Act 1986.

The High Court held that NIOC had declared a trust in favour of the Fund, but that the trust was not evidenced in accordance with section 53(1)(b) of the Law of Property Act 1925 because the relevant documents were signed by agents. It treated NIOC as beneficial owner and ordered the property’s transfer to CGC: [2024] EWHC 835 (Comm). The appeals concerned agency signatures, company execution, the effect of non-compliance with section 53(1)(b), and the validity of the section 423 order.

The Court of Appeal dismissed the appeal overall. Grounds 1 and 2 were rejected unanimously. Ground 3 was dismissed by a majority comprising Falk LJ and Flaux CHC; Zacaroli LJ dissented on that ground.

1. Section 53(1)(b). The provision requires written evidence of a declaration of trust over land to be signed personally by the settlor or, where relevant, the person holding the interest that is the subject of the trust. A natural person’s agent cannot satisfy the requirement. The contrast with sections 53(1)(a) and (c), the historical provisions in the Statute of Frauds, and the purpose of protecting landowners from false claims supported that construction.
2. Companies and execution. The statutory rules governing company execution provide the means by which a company can sign itself. A signature by an agent merely on behalf of a company is not the company’s own signature for section 53(1)(b). NIOC’s unpleaded reliance on Regulation 4 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 was too late, since it would have required evidence of Iranian law. Section 74(4) of the Law of Property Act 1925 did not alter that conclusion.
3. Declaration of trust. The question was objective. The Mortgage and Certificate of Title were capable of manifesting an intention to hold NIOC House on trust for the Fund, even though the parties believed that the Fund already owned it under Iranian law.
4. Ground 3. The majority treated section 53(1)(b) as mandatory. Without compliant written evidence, the court could not recognise the trust at the date of the transfer and had to treat NIOC as beneficial owner. The transfer therefore conveyed significant value to the Fund. An unenforceable moral obligation was worth substantially less than the property. The transfer was consequently a transaction at an undervalue for section 423 purposes.
5. Dissent. Zacaroli LJ considered section 53(1)(b) an evidential rule rather than a rule of validity. In his view, the trust existed from declaration, and transferring the legal estate to the beneficiary transferred no significant value. He would have allowed the appeal on Ground 3.

1. Court of Appeal (Civil Division): Grounds 1 and 2 dismissed unanimously. Ground 3 dismissed by majority; appeal dismissed overall.
2. High Court, Commercial Court: Sir Nigel Teare held that the Mortgage Documents did not satisfy section 53(1)(b) of the Law of Property Act 1925, treated NIOC as beneficial owner, and granted relief under section 423 of the Insolvency Act 1986: [2024] EWHC 835 (Comm).